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Monday, February 3, 2014

Who Ordered Christie's Attack Memo On Wildstein—Straight from the Randy Mastro Playbook?

New Jersey Governor Chris
Christie’s choice of a defense lawyer to lead him through his various scandals
is becoming more and more curious. After all, that lawyer –
Randy Mastro of the law firm Gibson Dunn & Crutcher – has his own rather
extraordinary history of controversy and ethical problems.

We say this from
watching him over the last four years try to guide Chevron through one of the
worst pollution scandals in world history.

In the Chevron
scandal – which has led to a record-breaking $9.5 billion court judgment
against Mastro’s client – the former deputy mayor to Rudy Giuliani has left a
trail of improper and unscrupulous behavior in his wake.

Consider:

**For years
Mastro has orchestrated a vicious campaign of character assassination against
New York human rights attorney Steven Donziger, who for two decades has advised
the indigenous groups that held Chevron accountable. Mastro convinced Chevron
to retaliate for the Ecuador lawsuit (which took place in that nation at
Chevron’s request) by suing the attorney and his indigenous clients for $60
billion in New York federal court. Mastro, who does not even speak Spanish,
claimed the entire two-decade litigation in Ecuador was a “sham” and that
Donziger – a Harvard classmate of President Obama – is nothing more than a
greedy “criminal mastermind.” (For background on Chevron’s horrendous conduct
in Ecuador, see Donziger’s website; this 60 Minutes
segment
on the case where a Chevron lawyer brazenly states the company should not be
forced to go to court; and this summary of the
evidence
to find the company liable.)

**Mastro is a
political fixer, not a trial lawyer. Since Mastro took over Chevron’s defense
in 2009, the oil company has experienced a devastating series of courtroom
setbacks. It lost the underlying case in Ecuador; lost unanimously before a
three-judge intermediate appellate court; and lost before Ecuador’s Supreme
Court, which affirmed the judgment unanimously in late 2013. Mastro’s team has
lost several appellate court decisions on the Ecuador matter in the U.S. – including one
just last week in the Ninth Circuit Court of Appeals. (The team
also lost appellate court arguments on various aspects of the Chevron matter in
the D.C. Circuit, the Second Circuit, the Third Circuit, and the Fifth
Circuit.) Even the U.S. Supreme Court rejected Mastro’s effort to obtain an
unprecedented injunction to block enforcement of the Ecuador judgment worldwide.

**Mastro’s
strategy has led to all kind of problems for Chevron’s management around the
world. Just weeks ago, a Canadian appellate court excoriated
Chevron
for trying to evade jurisdiction in three countries. It also ordered Chevron to
stand trial in Toronto on whether the villagers can seize the Canadian assets
of two subsidiaries to pay for their judgment. (Chevron stripped its assets
from Ecuador in anticipation of losing the case). The villagers are also
pursuing Chevron assets in the courts of Brazil and Argentina; leaders
throughout Latin America are being asked by Ecuador’s President to block the
company from new business opportunities in the region until it cleans up its
mess.

**Many of
Chevron’s largest shareholders are infuriated with how Mastro’s hyper-aggressive
strategy is causing reputational harm to the company. In 2012, several
shareholder resolutions stemming from the Ecuador problem garnered surprising
levels of support. In fact, a whopping 38% of shareholders (representing $73
billion in assets) voted to strip Chevron CEO John Watson of his Chairman
title, alleging a conflict of interest over the Ecuador matter. Several shareholders
and a member of Congress have asked the SEC to investigate Watson for failing
to disclose the Ecuador risk to shareholders. Read this take from Amazon
Watch’s Ecuador-based human rights campaigner on Watson’s
growing problems with the Ecuador matter.

**Mastro and
members of his team have been found by multiple courts to have committed
ethical violations on behalf of Chevron. In Ecuador, the trial court imposed a
punitive penalty after finding company lawyers threatened trial judges with
jail time if they did not rule in its favor. A federal judge in Oregon fined
Chevron and imposed sanctions after finding members of Mastro’s team used the
pre-trial discovery process to “harass” a small legal non-profit that was
assisting the villagers. For the Oregon judge’s decision read here; for the
devastating details from the lawyer who asked for the sanctions, see this affidavit.

**Mastro also
hired Kroll, the private investigation company populated with former FBI and
CIA agents, and paid them at least $15 million to set up a surveillance
operation that targeted opponents of Chevron. We know this operation involved
spying on Donziger and U.S. lawyer Craig Smyser when they were in Ecuador. Kroll
also deployed six private agents to spy on Donziger and his family in
Manhattan. Kroll CEO Daniel Karsen admitted under oath that the company had
prepared “20 to 30” confidential reports on Donziger for Chevron’s use. This
harks back to the infamous harassment that Ralph Nader suffered at the hands of
General Motors when he wrote his famous critique of auto safety, Unsafe at Any Speed.

**Mastro also
deployed another member of the Chevron team, the Miami-based lawyer Andres
Rivero, to offer a suitcase full
of cash to a former Ecuadorian judge to coax him to testify in favor of
Chevron. Mastro then traveled to Chicago to personally negotiate Chevron’s deal
with the former judge. Chevron paid Guerra hundreds of thousands of dollars, a
clear ethical violation as found by none other than Erwin
Chemerinsky,
a leading ethicist and the dean of the law school at the University of
California, Irvine. That’s after another Chevron agent at Kroll was caught
offering $20,000 to an American journalist, Mary Cuddehe, to pose as a reporter
so she could spy on the plaintiffs in Ecuador. Cuddehe outed the entire scandal
in The Atlantic.

The memo created
by Christie’s team trying to discredit his former ally David Wildstein is a
classic example of Mastro’s handiwork. The approach is simple: when the facts
are not on your side, try to assassinate the character of the witnesses who
threaten to disclose information that might hurt your client. Mastro is sending
a message to any other witness who might come forward to testify against
Christie: if you proceed, we will find all the dirt we can and publicize it far
and wide. This type of personal attack might be effective in politics, but it
gets agonizingly close to obstruction of justice when there’s a federal
investigation pending. Mastro’s problem is that he doesn’t know the difference
between Christie’s political survival and Christie’s legal defense, where he
faces potential criminal jeopardy.

Ultimately, aggressive
lawyering based on real facts is completely acceptable. Scorched-earth
lawyering based on intimidation of adversaries and potential witnesses is not. When
a powerful corporate entity or political figure becomes so desperate that it tries
to win on might what it knows it cannot win on merit, the line can be crossed. Gibson
Dunn writes in its marketing materials that when the law gets in the way of the
interests of its clients, the firm will endeavor to change the law or maneuver
around it. (Or, as in the case with Wildstein, try to pound its adversaries
into submission.)

That strategy
might be tempting to a bad-acting corporation when fighting impoverished indigenous
communities in Ecuador. But it is not working. And it certainly won’t work when
the adversary is the U.S. Attorney’s office and the leader of that office is a
man of great integrity.

Word on the
street is that Mastro has been bragging that the “racketeering” case he brought
against the Ecuadorians and their lawyers in New York has been a success. But
that case is nothing more than a show trial helped along by a U.S. judge who clearly
dislikes plaintiff’s lawyers, has made disparaging comments about the
plaintiffs, and who thinks he can rule on questions of Ecuadorian law from
Manhattan better than Ecuador’s Supreme Court can from Quito.

Significantly,
Mastro convinced Chevron to drop all damages claims against Donziger and the
Ecuadorians on the eve of trial to avoid a jury. This is a telling fact that
illustrates why Chevron has little confidence in its own case or in Mastro’s
trial skills. (See this post-trial
brief
and motion to
dismiss
filed by Donziger to understand just how legally and factually weak Chevron’s
fraud case is, and why it will not survive appeal.)

While Chevron
continues to lose ground in courts around the world, it has paid Mastro and his
partners an estimated $400 million
per year in fees for their (dis)services. It really doesn’t matter to a
lawyer whether you or win or lose when you can rake in that kind of big money. More
important to Mastro is being able to convince a client – in this case CEO
Watson and his General Counsel R. Hewitt Pate – that progress is just around
the corner. The worst result would be for the litigation to end. If it did,
numerous lawyers at Gibson Dunn might find themselves without work.

The lesson for
Christie when it comes to Mastro: remember the caveat, buyer beware.